Gilbert School loses line of credit because of Winsted financial woes

WINSTED >> The Gilbert School took out a $400,000 line of credit with TD Bank to ensure it could fund its payroll, but the bank revoked that credit last Thursday.

“That was one of the unfortunate outcomes of the [information] regarding the town and the cash flow problem,” superintendent of The Gilbert School, Anthony Serio, said about the bank’s decision. “The bank had to protect its investment.”

The school had not yet used the credit when it was revoked, however Serio said the action did not only affect payroll funding.

A project to replace the school boilers started early this summer. Financing for the project was also repealed by the bank as a result of the town’s financial issues according to Serio.

“The boilers are old,” Serio said. “They’re from 1959 when the original building was built.”

According to the superintendent, the project cost the school about $610,000. Most of the funding for the project came from The Gilbert School tuition stabilization funds. The school is looking into financing the remaining $160,000 with a different bank.

Serio said he was told that TD Bank will restore the credit once the town is able to “assure payment” to The Gilbert School.

Since it lost that backup resource, the school has “pledged” to cooperate with the town and the Winchester Board of Education to resolve the cash flow issue. All three parties met on Friday to discuss new disbursement schedules and ways each could minimize further financial difficulties.

“The agreement that was reached by the town manager, myself, and the BOE, was based on cash flow,” Serio said. “It was recognized that The Gilbert School could receive full tuition but it would have to be scheduled so that we get $300,000 mid-month and the balance at the end of the month.”

A payment of $300,000 for tuition was given to the Gilbert School Sept. 13, which will act as the first payment under the new disbursement schedule. Serio said the board of education’s payment will be expected toward the end of the month.

“So really we worked together so that we can all meet our obligations,” Serio said.

Serio said the Winchester BOE has yet to complete its tuition payment for the month of August. However the school will cooperate and excuse that late payment until January of next year.

Town Manager, Dale Martin, said he’s in the process of drafting a letter to the secretary of the state Office of Policy and Management, Ben Barnes, as well as the State Department of Education Commissioner, Stefan Pryor, to request a disbursement change as well.

Currently, the town is receiving Education Cost Sharing (ECS) payments from the state three times a year. In both October and January, ECS disburses 25 percent of $8 million. Towards the end of April the last 50 percent is disbursed.

Martin said he would like to see the disbursement of ECS funds rearranged to better suit the hole in tax revenues coverage. Instead of the 50 percent disbursement in April, he would like to receive it in October.

“This was suggested by OPM,” Martin said. “Since it was offered by them in unusual and rare circumstances, I believe the situation in Winsted…rises to the level of unusual and rare.”

Martin said he made it clear in his request that he was not asking for additional funds.

“This is a onetime only request,” he said. “And I think in relation to all of the other options they offered it could theoretically be the most timely way of addressing the cash concerns expressed by the board of education and Region No. 7.”

The Gilbert School has also agreed to write a letter to the appropriate officials endorsing a change in the schedule.

“We really feel that will alleviate the cash flow problem,” Serio said. “The intent is the WBOE will make us whole so that’s important.”

Though all parties involved are cooperating in the effort, Serio said the Winchester Board of Education is still on the hook.

“It has to be pointed out the contract that we have with the WBOE is right now in default,” he said. “The reality is they’re still in default and we can seek legal actions.”

Though he said the school would like to avoid pursuing a lawsuit, the option has been discussed.

“Lawsuit is the last resort,” he said. “Negotiations, cooperation and understanding each other’s needs is number one. I think people are all on the same page to work together to resolve these issues to move the town forward, not just education.”

Reach Mercy Quaye at 860-489-3121 ext. 321.

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About the Author

Reporter Mercy Quaye covers statewide breaking news for The New Haven Register, The Middletown Press, and The Register Citizen. Reach the author at mquaye@registercitizen.com
or follow Mercy A. on Twitter: @Mrs_WriteNow.